For more than a decade, the Chinese government has been working to push the Chinese manufacturing sector up the value chain. More recently, the push from the central government has become more formalized, resulting in the 2015 issuance of the State Council manufacturing modernization manifesto: Made in China 2025《中国制造2025》(State Council, July 7, 2015). View Full Post
How to Give Away your IP in China Without Realizing it Don’t gift your IP to China When working on complex contract manufacturing agreements, most of our clients tell us their main goal is to protect their intellectual property. This is particularly true for designers of start-up products where much of of their IP consists of trade secrets and know-how that require a formal agreement with the manufacturer. View Full Post
China Product Defects, Lawsuits, Hostage Taking and Exit Ban: Please, Please, Please Read This! As most of you already know, getting defective products from China manufacturers is almost always a possibility. In many cases, foreign buyers frustrated by bad product simply refuse to pay their Chinese factory. Often the unpaid amount is substantial. The foreign buyer then moves on to a new factory. View Full Post
In an effort to reduce the challenge of manufacturing in Mainland China, many foreign companies decide not to go direct. They instead make use of intermediary companies that act as the sellers in the transaction. These intermediaries deal with the buyer, but the messy business of manufacturing is done in the PRC. View Full Post
China Contracts: The Deadline Trap Negotiating contracts with Chinese companies When negotiating a contract with a Chinese party, firm deadlines are essential, but also dangerous. They are dangerous because many (most?) Chinese companies have mastered the technique of manipulating deadlines to their advantage. There are many reasons to set a deadline for concluding a contract with a Chinese party. View Full Post
How to Form a China WFOE: Revealing Investor Ownership is NOT Optional, Part 2 China WFOE Formation. It’s complicated. Yesterday, in the first part of this two-part series, I discussed how China is requiring foreign companies reveal all layers of WFOE ownership in the WFOE formation stage, I talked about how just as so many foreign companies are realizing the importance/necessity of forming a China WFOE, China has made it nearly impossible to form a WFOE without a full list of its owners. View Full Post
China E-Commerce: Resistance is Futile China e-commerce laws The PRC National People’s Congress last week promulgated a second discussion draft of the PRC E-Commerce Law (电子商务法草案). If you are interested in commenting, you can find the new statute and a portal for comments here. This statute is an attempt to gain greater control over the online consumer markets. View Full Post
Service Payments from China: Avoid the VAT Tax Trap Consider the following situation. Your company is a service provider. Let’s say your business assists domestic and foreign entities register drugs with the FDA. You are contacted by a Chinese entity to do a registration. Having read China Law Blog (See Getting Money out of China: It’s Complicated), you submit a written, signed invoice to the Chinese entity and you require payment in advance. View Full Post